Indian conglomerate Tata has signed the first stage of an agreement to combine its European steel business in a joint venture with German steel manufacturer ThyssenKrupp.

The deal, creating the second-biggest steel company in Europe after ArcelorMittal, would lead to job losses shared evenly across both firms.

ThyssenKrupp Tata Steel, as the new group would be known, plans to reduce its workforce by around 4,000 staff – half from from administration and the other from production.

Business Secretary Greg Clark and Roy Rickhuss, the chair of the National Trade Union Steel Co-ordinating Committee, welcomed the deal but only if a commitment to safeguard jobs and extend blast furnace operations over the long-term at the Tata site in Port Talbot were maintained.

Mr Rickhuss, a representative of the Unite, GMB and Community unions, said: “The steel trade unions cautiously welcome this news and recognise the industrial logic of such a partnership.

“This would create the second biggest steel business in Europe which could deliver significant benefits for the UK.”

He added: “As always, the devil will be in the detail and we are seeking further assurances on jobs, investment and future production across the UK operations.”

Commenting on the joint venture in a statement, ThyssenKrupp chief exec Heinrich Hiesinger said the two firms must consolidate and become more efficient due to increasing pressure from imports and an overcapacity in the industry.

He wrote: “We will not be putting any measures into effect in the joint venture that we would not have had to adopt on our own.”

The combined business would be headquartered in Amsterdam and boast a turnover of c.£13.3bn a year, employing about 48k people across 34 sites and shipping around 21m tonnes of flat steel products annually.

Tata Steel’s chairman N Chandrasekaran said in a statement: “The strategic logic of the proposed joint venture in Europe is based on very strong fundamentals and I am confident that thyssenkrupp Tata Steel will have a great future.”

A memorandum of understanding for the joint venture has now been signed, paving the way for the due diligence process.

If the two companies reach a final agreement and secure the go ahead from regulators, the deal is expected to be finalised before 2019.